Lawmaker urges halt in cash flow to North Korea

Japan should suspend remittances to North Korea as a strong warning to Pyongyang to not test-launch another ballistic missile, according to Shinzo Abe, a Lower House legislator of the Liberal Democratic Party.

“Although what we really need is a stick-and-carrot approach, our country currently does not have a (legal) means for sanctions against North Korea,” said Abe, who is part of a seven-member suprapartisan group of lawmakers considering a diplomatic strategy against Pyongyang. “We should have measures that will enable us to demonstrate our readiness to implement sanctions if necessary.”

North Korea is believed preparing to test-launch a new, long-range missile as early as this month. The Taepodong-2 is believed to have a range of up to 6,700 km, which would bring Alaska and Hawaii within its reach.

At a recent meeting of the foreign affairs division subcommittee of the LDP’s Policy Affairs Research Council, Abe, along with other lawmakers, proposed revising the Foreign Exchange and Foreign Trade Law so the payments can be halted.

Under Article 9 of the current law, cash remittances can be halted in case of a drastic change in international economic situations. Article 16 of the law stipulates that cash remittances can be restricted when there is an international treaty or agreement to do so.

“Some people argue that even under the current framework of the law, cash remittances can be halted if the government judges that Japan’s security may be seriously threatened. But it is not expressly stipulated in the law and I think it is better that the law be revised,” Abe said in an interview with The Japan Times.

Although there is no confirmed data on the amount of cash remittances flowing into North Korea from pro-Pyongyang Korean residents of Japan and members of the General Association of Korean Residents in Japan (Chongryun), some estimates put the figure at 60 billion yen a year.

Abe’s group will also try to regulate exports of goods to North Korea by enacting new legislation similar to the so-called catch-all export controls in the United States.

The U.S. measures enable the government to immediately halt the export of a commercial product once it judges that the product has been used in the development of weapons, even if the item has yet to be listed as a control target.

According to a draft of the new legislation drawn up by Abe’s group, the minister of international trade and industry would be able to prohibit the transfer of goods and technology to such countries once it is judged that such transfers may seriously affect Japan’s peace and security. Violators would face a maximum fine of 1 million yen or up to three years’ imprisonment.

The LDP lawmaker said that about 20 percent of the electronic equipment on a North Korean submarine sunk by the South Korean Navy last December was believed to have been made in Japan.

In addition, some experts on North Korea say they believe nearly 40 percent of the semiconductors used in Taepodong-type ballistic missiles are Japanese-made.

The group aims to enact the legislation in the next extraordinary Diet session, expected to be held this fall.

Abe disagrees with some people who maintain that the legislation proposed by his group will not be effective because cash and goods can reach North Korea through a third country.

“If such legislation can at least restrict 10 percent or 20 percent of the total flow of money and goods to North Korea, it can certainly cause damage to the country,” Abe said.

He also criticized Japan’s financial authorities for failing to strictly monitor ailing domestic credit unions with links to North Korea. These financial firms are widely believed to be sending cash to the Stalinist state.

“Credit unions fall under the supervision of prefectural governments, but according to the Financial Supervisory Agency, they have not strictly looked into businesses and financial conditions of those credit unions, because they faced strong opposition from North Korean residents in Japan when they tried to inspect those credit unions in the past,” he said.

Because the FSA plans to inject nearly 1 trillion yen worth of public funds to bail out those financial institutions, which are saddled with huge bad loans, Abe plans to call on the FSA officials to submit detailed reports on the conditions of the businesses to the LDP as early as this fall.

The legislator noted that while the money sent to North Korea through those financial institutions does not constitute a large proportion of their nonperforming loans, such cash flows should be strictly monitored.

“(The situation) is different from the failure of an ordinary credit union,” he said. “These credit unions are sending money to a country that may greatly threaten Japan’s security.”